Retail faces CVA crunch

Richard Fleming, the insolvency expert behind company voluntary arrangements
s for the Suits You, Blacks and JJB Sports retail chains has said the sector
could see a fresh wave of CVAs as the end of quarter rent deadline approaches.

Speaking to theFinancial
Times Fleming, a partner with KPMG, said the MArch deadline would place
creditors, especially landlords, in the position of deciding whether to ”
support” tenants through to the end of the year.

Fleming has pioneered CVAs for retailers facing the challenge of having to
negotiate deals with scores of disgruntled landlords at the same time. The
breakthrough came with JJB, but others have followed most recently The
Speciliaty Retail Group, owners of Racing Green and the Suits You mens stores.

CVAs are a means for companies on the brink of collapse to renegotiate their
debts with creditors and avoid a formal administration process through the
courts. CVAs requires the agreements of 75% of the creditors by value, but it is
“bound” by the agreement to repay its debt. Critics, including landlords, have
argued CVAs allow troubled companies to escape their full obligations.